Home / Business / New Intel CEO shuts down band aid

New Intel CEO shuts down band aid

Intel Corp.'s new CEO Bob Swan pulled out the band aid to reveal some of the chip giant's problems Thursday and now investors have to hope he can solve them and get on a better road.


INTC, -1.89%

reported earnings for the first quarter and revenues on Thursday that exceeded some estimates, even with a sharp decline in key data center operations. But that deal and more price reduction of memory circuits led Swan – in its first performance report since its permanent CEO ̵

1; to lower Intel's revenue management for the rest of the year by $ 2.5 billion.

"The decline in memory pricing has intensified, the data center's build-up and capacity melting that we described in January is more pronounced than we expected, and China has grown larger, leading to a more cautious IT spending environment," says Swan. with analysts followed by a statement of confidence that demand will improve in the second half, based on customer calls.

Don't miss: Promise of a magic recovery for tech comes with little evidence to back it up

Intels Stocks stumbled around 7% in ex-post trade so far this year, the stock is about 25%, while the S & P 500 Index

SPX, -0.04%

is about 17% years to date. Its much lower control comes on the back of Intel's big announcement last week that it would be leaving the 5G modem, where the largest customer for its communication chips was Apple Inc.

AAPL, -0.91%

. Swan told the Wall Street Journal that Intel's decision was a direct result of Apple's surprise deal with Qualcomm Inc.

QCOM, -2.03%

as a jury trial on their patent and royalties began.

Swan continued to break down Intel's previous ambitions on Thursday and noted that Intel was trying to focus more on withdrawing companies that did not fit into the core, such as shutting down Saffron, a cognitive data platform Intel acquired in 2015. The Swan seemed to regret bad movements of former leaders without naming any names.

"In recent years, this focus has resulted in the McAfee and wearables business being closed, closed by Saffron and divesting the Wind River, and our share of revenue has gone from about 36% to about 30% in the quarter," he. "By doing fewer things, we will do better on the things that are most important."

The latest representatives of the Swan have really made many steps to take Intel to new directions – spend billions on communications and Mobile chip acquisition, and billions more on seemingly unsuitable software movements – to diversify beyond its core PC business, but so far it seems to have done the best with the acquisition of Mobileye, which develops vision-based advanced drives and had a revenue growth of 38%. 19659002] See also: Chip stocks snap sex session record driving, which Xilinx drops after profit

That's probably good for In Consider releasing ambitions that cost too much without yielding returns, but still have to figure out how to succeed with the companies it will keep. Another issue that damages the company is that its PC business has been hampered because it failed to meet all the demand for its chips because it has struggled in the transition to a new manufacturing code. "We have never undertaken to be a limitation to our customers' growth," says Swan. "We have increased our capacity to improve our position during the second half of the year, even though the product mix continues to be a challenge during the third quarter, as our teams are adapting the range with customer needs. "

Intel said in the first quarter its data-centered revenue was $ 7.5 billion, down 5%, while its data center group ended the quarter with $ 4.9 billion revenue, down 6%. Intel said it expects revenues in its data-centric business – its main growth business – to continue to decline in the high single digits.

Investors will look to see if Swan's predictions of a better second half, especially for data centers The group will be true, Swan said that the company's first in a series of new chips based on its long-awaited next generation billing process is expected to be in consumer products "on the shelf for the holiday season" with chips for servers to follow 2020. [19659002] Memory prices and a continued decline in data center expansion are clouds that continue to hang over Intel and other chip makers for months. At least Swan got rid of some other headaches when he was treating them.

Do you want this type of analysis sent to your inbox? Subscribe to MarketWatch's free MarketWatch first take the newsletter. Sign up here.

Source link